RVX - Managing PerceptionsAfter my initial postings trying to gain better understanding(s) about rvx-208 successes, understanding management capabilities, understanding a little about the key players in terms of capital sources and access to intellectual resources, gaining a bit of understanding about competitors and understanding the high risks and a little bit about big pharma's way to play the chess game given that it is a very complex, high risk area of life (chemistry, biology, science, etc) as everyone on earth must understand the complexities, how little we understand and how brilliant the scientists are that labour in these fields I have a few thoughts. I invested 5 years ago just for speculative purposes. I've retained my position even after the June 27 or 28, 2013 disaster and I still hold the position AND I feel I'm in good hands on the scientific, medical, capital and some management functions.
I also recognize that it is the negotiations behind the scenes that are critical to moving forward i.e. getting the capital and other resources in place.
However, and this goes back to one of my earliest postings, shareholder equity must be managed and this is not just a function of the science and attracting more capital to survive while being leveraged down by suitors and potential partners because you need their money. Great scientific results will provide negotiating leverage but the equity value will be diminished by standing on this leg alone.
Obviously TPD and/or FDA approval at some point down the raod will drive the stock high. However, managing perceptions of shareholders on the journey to approval can dramatically impact the strategies and leverage as it moves along toward each next step and approval. The higher the share price the higher the leverage because there are more options.
Managing Perception Let's look back to May and June of 2013.
- In May, if I recall, the share price in Canada was $3 plus.
- The spin off was completed and the share price adjusted down but was still reasonable, but us retail shareholders had no liquidity on Zenith and we stiil don't and won't (not withstanding the eventual sub-spinoffs).
- We were moving toward the date when the (I can't recall the trial name) was to be announced by the Cleveland clinic.
- If I recall, the stock was still well above $2 in June. I was not monitoring it.
- The results were posted and the trial achieved a .4% yet statistically significant plaque regression vs a target of .6%.
- The share price fell to $.15 because this was viewed as a failure!!! (i.e. rvx-208 doesn't work - well, science is not like that and general investors don't understand science, and thus,their perceptions must be managed.) This actually makes me wonder how Dr Wong and the other scientists at RVX perceived the trial. Did they see the .4% regression as a good sign or a failure?
What became perceived as a failure should have been perceived as a success,
just slightly lower than it's extremely aggressive goal! There have been many excellent things achieved in the construction of the experiment and RVX, none the less the incredible amout of brilliant thinking to develop the rvx-208 molecules (and variants).
However, there seems to be absolutely no management of the stock market's reaction...I mean pro active management of comunications and brand positioning.
What should have happened (I'm basing this on the assumption that they did not try a failed attempt to do this).
- Months before the announcement of the trial results a communications team (an independent public relations or communications firm with strong expertise and connections to the stock markets and experience in pharma) should have been engaged and they should have had broad experience in North American markets.
- This external team should have had a very strong and close working relationship with Don, the scientific team as well as capital investment partners in order to gain a thorough understanding of the history, successes and progress of the company. They could have leveraged Eastern and NGN prior to the publication of results.
- Communications should have been established for every level of result.e,g
- true failure - negative regression or no statistically signifncant difference.
- statistically significant findings for any and each level below the .6% target and what are the signs of hope at these levels. For example, should a statistically significant regression of .4% be considered as a failure if it still could be life saving?
- Success - media content if .6% and above were achieved. Communications specialists could have managed the leverage this incredibly for the benefit of shareholdres.
The fact that the media was not managed was unbelievable, to say the least. However, media management does not start the day of the crisis. It must be pro-active. More importantly, it should take the role of brand building.
While the science and knowledge is the engine of
this company and the intellectual horsepower is the source of discovery and innovation this is a company that
doesn't understand that they have earned the power of their brand. I'm assuming, when I say this, that their research was conducted with integrity and that the post hoc analysis was conducted by independent scientific and statistical experts and based on this I get a very positive impression.
It is well recognized that since the days of various advertising giants such as Leo Burnett who built the Jolly Green Giant and the Pillsbury Doe Boy to J. Walter Thompson, David Ogilvy and many others ...that the central power of many companies is their brand equity. This is clearly true of big pharma with their brands and these brands have clout far beyond their scientific merit.
So, in summary, my message to Resverlogix is that beyond the deals they need to:
- Take control of their messaging in a pro-active and confident manor...control the media and manage perceptions of success.
- Leverage their core values, talent, depth, committment and achievements into a clear and concise message to the broad base of potential shareholders that should drive the value of this stock. They (RVX people) will continue to drive value.
Bottom line - don't let others control how you should be perceived.
Toinv